Frank to White House: Fight the GOP

House Financial Services Committee Chairman Barney Frank is worried that the GOP is scoring points with its attacks on housing giants Fannie Mae and Freddie Mac, and he’s urging the White House to fight back.

In the memo, a copy of which was obtained by POLITICO, Frank made the case that Freddie and Fannie are being managed responsibly, and aren’t doing further economic damage to themselves now that they’ve been taken over by the government.

But events late Wednesday made it politically difficult for Frank to make that case – Freddie Mac reported that it had lost $8 billion for the quarter and would likely need more than $10 billion in additional aid from the government. Frank staffers say that’s because Freddie is still suffering from bad decisions it made in the past, even though it is making wiser choices now.

“The point of Chairman Frank is making in his memo is that they are not losing money on operations since being taken into conservatorship by [President] Bush,” said Frank spokesman Steve Adamske late Wednesday, after the Freddie results were made public. “The losses, as we understand it, were from business decisions before the takeover.”

Still, Republicans were quick to pounce, saying the losses reported by Freddie Mac prove that something needs to be done about the housing giants. “As the old saw goes, everyone is entitled their opinion, but no one is entitled to their own set of facts,” said Michael Steel, the spokesman for House Republican Leader John Boehner (Ohio).

In the overall messaging wars, Frank wrote in his memo, Republicans have decided to fight Wall Street reform by arguing that the bill is not complete because it doesn’t reform Fannie and Freddie, whose failures were at the heart of the financial meltdown.

“They have gained a lot of traction with that argument,” Frank wrote of his Republican critics, “in part because we did not fight back against the misrepresentations early enough. I want to be sure that we do not repeat this pattern.”

Freddie and Fannie have become a central rallying cry for Republicans who have said over and over again in recent weeks that the bill now on the Senate floor fails to cover the housing sector. Now Sen. John McCain and others are poised to offer an amendment that would force the United States to give up its control over the beleaguered financial firms, which collapsed into government conservatorship in 2008.